Densification arising has not reduced automobile use in Australian urban areas, despite the claims and expectations of urban consolidation policy (“smart growth”) proponents. Urban consolidation policies have been adopted in virtually all of Australia’s large urban areas. Their principal focus has been to force new development away from the urban fringe, while densifying already developed areas. Urban consolidation theory holds that densification will lead to reduced automobile use.

Among the five largest capital cities (Sydney, Melbourne, Brisbane, Perth and Adelaide), per capital automobile use rose 11 percent between 1999 and 2006. The smallest increase was in Melbourne, at 5 percent. The largest increase was in Perth, at 26 percent.

Among the three smaller capital cities (Hobart, Darwin and Canberra), automobile use increased approximately 10 percent per capita between 1999 and 2006. The smallest increase was in Canberra, at 1 percent, while the largest was in Darwin, at 33 percent.

This is not to suggest that urban consolidation policy has had no impact in Australia’s cities. Housing affordability has been virtually destroyed, as house prices have risen 70 percent relative to household incomes in just 10 years. For example:

In Perth, the purchase and financing cost of the median price house has risen more than $500,000 in since 1996 (inflation adjusted). By comparison, in Austin, Texas, an urban area of similar size and with somewhat higher demand as Perth, there has been a reduction in the purchase and financing cost of the median priced house over the same period. Generally, land use policies in the Austin area are responsive to demand rather than prescribed by the planning visions that have turned into such nightmares in Australia (see Demographia Third Annual International Housing Affordability Survey).

That’s right – the customary, sanctimonious outcries of groups like MoveOn.org spewing forth their political spin over the airways reigns. Immediately following Bush’s vetoing of a proposed expansion of SCHIP to the tone of $35 billion over five years, the political machine of sentimental ecstasy jumped into motion. Not only have numerous politicians and special interest groups slyly manipulated the facts to a level of emotional basement, nobody seems to be discussing the critical and fundamental issues surrounding SCHIP ─ its stifling, long-term consequences and its inequitable, funding allocations to states.

Yes, to maintain SCHIP, which provides health insurance to children whose family income is too high to qualify for Medicaid yet too low to afford private health insurance, congress bears the need to increase federal funding over the next five years by $8 billion as the CBO stated. Before even tacking on such increases, we should be aware of the red flag that the Department of Health and Human Services saw back in August ─ some states were delving out insurance to families earning at least 350% above the poverty line.

Yet, the noted situations did not entail states merely expanding coverage above the already SCHIP-insured, low-income earners (also note that states insure hundreds of thousands of adults under SCHIP); the states were ignoring the neediest. This governmental dereliction of responsibility is why the DHHS had to mandate that states could not undertake such action until the state covered at least 95% of income earners under 200% of the poverty line.

At the core of the problem lies SCHIP’s inherent flaw as an allotment-and-dependence “entitlement” (a term for an unfair allocation of another’s efforts); unlike even Medicaid with its dollar-for-dollar matching system to the states, the federal treasury can boast almost a 3:1 payout system to states under SCHIP. The perfect opportunity exists for states to capitalize by gaining greater breadth and power backed by federal tax dollars. Sounds familiar? Remember when members from both parties successfully dealt with the same problems with another counter-progressive “entitlement” field: welfare. Some of the solutions utilized by politicians in the mid-90s to phase out AFDC for workfare should apply with SCHIP. Politicians should strike down the system of matching grants and institute set block grants instead; this very act would levy accountability on state governments to focus solely on those who truly and absolutely qualify for SCHIP instead of citizens capable of purchasing their own insurance. And if a state desires to expand SCHIP, the officials would not capitalize like now on the hard-earned tax dollars from citizens in other states ─ you bet individuals in their respective states would remain watchful over such programs like SCHIP as they bear the burden through taxation.

Now as states focus on insuring those below a specified income margin, there exists a serious and conspicuous consequence: economic quicksand. If the accomplishments of my labor warrant a rise in personal earnings, then I could easily find myself substantially poorer than before as my taxes have increased, my SCHIP benefits have dissipated, and exorbitant premiums have presented themselves. Even a shot of Barack Obama’s “Hope Elixir” could not alleviate my worry over financial insecurity.

Yet, as states expand SCHIP and similar programs, families choose such “entitlements” over private insurance; cost shifting along with the crowding-out effect. Thus, SCHIP attributes to substantially rising private coverage costs immediately above SCHIP’s qualifying income ceiling. The absurdity of SCHIP-expansion supporters reaches its zenith as they cite that substantial monetary increases of the program coincide with substantial cigarette tax increases to cover cost. If expansion of SCHIP truly focuses on individuals who can’t afford private health insurance, then why would politicians support implementing a regressive tax which will financially punish the poor as such taxes bear weight primarily on that economic bracket?

Maybe the rational of politicians advocating SCHIP expansion rests with the numerous special interest groups that favor government supremacy over coverage thinking government provides better health care quality? I pray that such individuals do not ignorantly limit other prudent ventures to combat poor health like addressing poverty and advocating educational reform (see University of Chicago, Prof. David Meltzer, What Do We Really Know About Whether Health Insurance Affects Health). Maybe the rational of politicians advocating SCHIP expansion rests with the powerful lobbying machines that directly benefit from increases in subsidies for health insurance and care? For true reform to take place, we must wisely recognize the greedy hands of the special interest groups and insurance companies in the governmental cookie jar for healthcare subsidization.

Whether it’s the corporate welfare to employers controlling coverage or it’s the unfair, price-gouging consequences of governmental programs, we Americans must fervently advocate reform of the current system. Many prominent politicians from both parties misrepresented the latest Census Bureau data on the uninsured to fuel their agendas. Sadly, those agendas seem bent more on absolutism as the government either subjugates us to its omniscience over the health care market or obligates us to mandatory health insurance. Do we really want to fertilize the root of the problem with its third-party costs? Is this true reform, or are we merely trading one set of chains for another? What ever happened to you, the capable citizen?

The Chicago Tribune reported today on an expected recommendation to turn the Cook County health system over to professional management, much as had been done with the scandal-plagued juvenile detention system. I was struck by a comment from one commissioner, who was quoted as saying “If we’re not going to do juvenile detention and…we’re not going to do the hospitals, then what is the board going to do? If they keep taking pieces out of the job, pretty soon you won’t need commissioners either.” Well, I don’t know all the other pieces there are to the job and whether each of them is run well or poorly. But if there really were no other justification for having commissioners besides jobs for them–if nobody could point to any services the county government performs well and efficiently–then that would be the right move, wouldn’t it?

The Seattle Times has editorialized against the proposed transit and highway tax, which is on the November ballot. The Times notes that most of the money will go to light rail, which principally carries bus riders and thus is not effective in reducing traffic congestion. The Times further notes that

… the surest way to reduce congestion on roads is to build more lanes. So says a report issued by State Auditor Brian Sonntag last week, and so says human experience. New roads help. The part of Proposition 1 that goes for roads — a 0.8 percentage point jump in car tabs and a tenth of a cent on sales tax — would actually reduce congestion. But it is the minor part.

It is only to be hoped that the wisdom of The Times will spread to other establishment newspapers, which have all too often been nothing more than lap dogs of ideologues who claim that urban rail reduces traffic congestion, even though the planning reports on which their proposals are based show no material impact.

Housing prices have exploded relative to incomes so much that today it takes more than $400,000 more to purchase and finance the median priced house in Sydney than just 10 years ago. Virtually all of the cost increase is attributable state government policies, principally land rationing and exorbitant taxes and development levies under “urban consolidation” policies. The result has been housing construction rates that are lower than at any time in decades.

Up until now, the New South Wales state government has been in systematic denial. Like Soviet planners whose policies produced long bread lines, they have never understood that rationing goods that are in demand increases their price and leads to scarcity.

However, there is now a break. The New South Wales government has reacted with a positive measure to address the Sydney housing affordability crisis. The government has announced reductions in development levies that could reduce the prices of new houses by from $10,000 to $15,000. Of course, this is a very small start in the direction of the fundamental planning reform required to restore housing affordability in Sydney. But, perhaps the “bread lines” in Sydney will get shorter.

The World Bank has just published a report that, in effect, quantifies the value of the rule of law and strong, modern, democratic institutions. The report Where is the Wealth of Nations? estimates the value per capita of natural resources and the built environment of most nations. The report goes on to estimate the “intangible wealth,” which is, effectively, a measure of the value of the nation’s economic and political institutions.

Not surprisingly, the higher income nations have the greatest wealth. Total wealth per capita of Western European nations, Japan and the United States tends to be in the $400,000 to $650,000 range. The overwhelming majority of the wealth is intangible. For example, the wealth per capita of the United States is estimated at $513,000, which consists of $15,000 in natural resource and agricultural wealth, $80,000 in built environment and produced capital and $418,000 in intangible wealth.

By comparison, the African nation of Gabon has natural capital of $29,000 per capita, nearly double that of the United States. However, Gabon’s total wealth is only $43,000, less than one-tenth that of the United States.

The highest wealth estimate is for Switzerland at nearly $650,000. The report uses nominal exchange rates, which explains why the United States ranks below some European nations. Use of purchasing power parity exchange rates would rank the United States above all of the nations surveyed in the report.

The conclusions of the World Bank report are similar to those of international economic indexes produced by the Heritage Foundation and the Fraser Institute.

Less than 0.3 percent of Australia’s land area is in urban development. In the upside-down world of politics, it should come as no surprise that public policy virtually bans urban development in the other 99.7 percent. Every large urban area has adopted “urban consolidation” policies (“smart growth” or “compact city” policies) to fight the dreaded demon, “urban sprawl,” which, of course, is nothing more than the spreading out of urban areas to accommodate new population and maximize economic opportunity. The reality, however, is that urban consolidation is combating the middle-income quality of life, as housing prices have predictably exploded relative to incomes as a result of the land rationing. Any competent economist would have predicted this. No economist was asked.

The urban planning community is in denial, putting forth the view that their land rationing policies have not driven up prices. Perhaps the most invoked refuge is the view that people don’t want to live on the fringe, where development is banned and that they prefer to live in the cores of urban areas. Everyone has abandoned the fringe and they are all bidding for properties in places like Sydney’s eastern suburbs, driving up prices. This is both disingenuous and absurd.

Before the planners managed to seduce governments into destructive urban consolidation, Australians, like Germans, French, Canadians, Americans, Japanese and Swedes were moving to the urban fringe, where housing was affordable. Then came the development bans and the perpetrators tell us that Australians are somehow different — that young families with children would much rather live in rental units without gardens and have their children play on balconies (actually the research, ignored by the planners, says the opposite).

Indeed, if the market is no longer interested in less expensive housing (and home ownership) on the urban fringe then there is no need for urban consolidation policy. Eliminate the urban growth nooses and see what happens. If we are to believe the planners, the hundreds of thousands of renting and forming households will stay put in the core… perhaps two or three will take advantage of the cheaper housing on the fringe. This is the absurdity. The planning community, which has often been more inclined to act on personal impressions, while ignoring the data, hasn’t anything to support this view but a statistically insignificant sample of opinions exchanged at their inbred conferences.

There are, however, signs of hope that some states may begin to release more land for develop and release the Great Australian Dream from captivity. The governments of Queensland, which is already receiving huge migration from overly regulated (even by Australian standards) New South Wales and South Australia, with its near zero population growth. Much more is needed, but it is a start.

Among the more recent articles of faith advanced by urban planning clergy has to do with “free parking.” The idea is that without free parking our cities would not cover so much land area (or “sprawl” to use the theological pejorative) and people would be riding transit instead of driving cars.

The Christian Science Monitor recently published an article about a Purdue University professor with nothing better to do that count the number of angels dancing on the head of a pin — oops — rather, the number of free parking spaces.

The predictable urban planning answer is to make people pay for free parking. They already do, of course, in the prices they pay for products at stores and in the garages that are included in the prices of their houses.

Democratic Presidential candidate Hillary Clinton’s baby bond idea — giving $5,000 to each baby for use in financing a college education or buying a home, certainly gets to the crux of issues that are of concern. The cost of college education has been rising inordinately and the nation needs a well educated electorate. At the same time, housing prices are escalating out of control in many parts of the country, and many people born today are simply likely to never be able to afford their own homes. This is a particularly ominous issue because of the role that home ownership plays in generating middle income wealth.

There is, however, a better way. Ms. Clinton could promise to work hard to get house prices under control. America has become a two speed nation with regard to housing prices. In just six years, the cost of a median priced house in some markets has risen $120,000 relative to prices in other markets. The difference? Land use regulation. Metropolitan areas with so-called smart growth have seen median house prices rise $120,000 compared to those without smart growth (adjusted based upon price in 2000).

Smart growth is the culprit. Smart growth rations land, which inevitably increases house prices. Smart growth also imposes unprecedented taxes, fees and costs on the development process, which of course is passed on to buyers.

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This is Heartland's unofficial blog, which means no opinion posted here should be taken to represent an official view taken by The Heartland Institute. All opinions, insights, discoveries, revelations, observations, and profundities herein are solely those of their respective authors.